Which of the following products can be sold through mass advertising? Answer Selected Answer: A new brand of baby diapers Correct Answer: A new brand of baby diapers Which of the following products should be sold face-to-face rather than by mass advertising? Answer Selected Answer: A pharmaceutical which can only be understood by doctors Correct Answer: A pharmaceutical which can only be understood by doctors Which of the following is considered to be a cost
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What is economics? Economics how individuals, firms, governments and economies deal with the problem of infinite wants and finite resources, it is the study of how the society resolve the problems of scarcity. Microeconomics: addresses the various market influences that impact upon a firm’s revenues and costs. Macroeconomics: addresses the economy-level issues which similarly affect a firm’s revenues and costs. Infinite wants: limitless desires to consume goods and services (big house, luxury car
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Market Structures and Pricing Strategies Kiona Thomas American Public University Econ600 Abstract The article analyzes the four main market structures, which are perfect competition, monopolistic competition, oligopoly and monopoly. It provides a detail description of the market, as well as explains the pricing strategy a firm would pursue in that particular market. The article also concludes with a real world example of Visa pricing strategy by examining it oligopoly market structure. Visa
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PED Price Elasticity Demand When price Quantity demanded When price Quantity demanded We have to Study not the direction of the change but the degree of the change If the price Quantity demanded markedly : Elastic = High response If the price Quantity demanded not markedly ( Low response )
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In economics, marginal revenue is the revenue that an additionally produced unit will create, if sold. When a company is in a competitive market, the price of the unit sold does not change, so marginal revenue is the price of a single unit. The relationship between marginal revenue and total revenue is calculated when marginal revenue is equal to the change in total revenue divided by the change in quantity, when the change in quantity is equal to a single unit. Mathematically marginal revenue
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refers to the responsiveness of demand due to changes in other economic variables. It is an important concept introduced by the economist A. Marshall, which helps firms to anticipate effects of changes in economic variables so as to adopt an optimal competitive behavior. To better understand the concept of elasticity of demand we will first concentrate on the economic factors affecting demand. Demand is referred to as being the amount of goods and services that consumers want and have the capacity to
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barriers to entry to a market and how these barriers might affect market structure Barriers to entry are designed to block potential entrants from entering a market profitably, they seek to protect monopoly power and usually have the effect of making a market less contestable. In a perfectly competitive market barriers to entry are not allowed as otherwise the market would not be perfectly contestable as one firm will have an advantage over another. One barrier to entry in a market is research and
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marginal cost curve above its intersection with the average variable cost curve is the supply curve for a firm operating in a perfectly competitive market. The portion of the MC curve below its intersection with the AVC curve is not part of the supply curve because a company or organization would not operate at price below the shut down point. In a perfectly competitive market, a supply curve shows the quantity a seller's willing and able to supply at each price. In addition, for each price there
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Chapter 14: SOLUTIONS TO TEXT PROBLEMS: Quick Quizzes 1. When a competitive firm doubles the amount it sells, the price remains the same, so its total revenue doubles. 2. The price faced by a profit-maximizing firm is equal to its marginal cost because if price were above marginal cost, the firm could increase profits by increasing output, while if price were below marginal cost, the firm could increase profits by decreasing output. A profit-maximizing firm decides to shut down
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organization, market power is the ability of a firm to profitably raise the market price of a good or service over marginal cost. In perfectly competitive markets, market participants have no market power. A firm with total market power can raise prices without losing any customers to competitors. Market participants that have market power are therefore sometimes referred to as "price makers" or "price setters", while those without are sometimes called "price takers". Significant market power occurs
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